Stocks Slide, Gold, Oil Spike as Iran Vows Retaliation

Date: 06 January 2020 - 23:12

News ID: ۷۴۷۷۹

TEHRAN (Dispatches) -The brutal act of assassination of Iranian General Qassem Soleimani by U.S. strike, has sparked a massive panic in the region, especially in the Arab countries supportive of the U.S. presence in the Mideast, as they fear a harsh Iranian response could put their interests at serious risk.
Iran has vowed that its retaliation would be decisive and would come at its right time and place.
Stocks fell on Monday, picking up where they left off on Friday as tensions escalate in the Middle East.
All three of the major averages were lower with the Dow Jones Industrial Average down more than 200 points, or 0.7 percent, in the opening minutes of trading. The S&P 500 and Nasdaq Composite were lower by 0.6 percent and 0.8 percent, respectively.
Boeing was lower after an internal audit uncovered another potential design flaw with its best-selling 737 Max aircraft. The planemaker isn't expected to get the 737 Max back in service until February at the earliest.
Gold miners Barrick Gold and Newmont Mining rallied while energy giant Exxon Mobil was lower after a regulatory filing said its fourth-quarter results will be lower than a year ago. Rival Chevron was also lower on the news.
As U.S. equity markets sold off, commodity prices rallied. West Texas Intermediate crude oil, the U.S. benchmark climbed 1 percent to $63.65 per barrel. It jumped 3.1 percent to $63.05 per barrel on Friday.
Brent crude, the international benchmark, gained 1.2 percent to $69.41 per barrel. It rose $2.35, or 3.5 percent, to close at $68.60 per barrel on Friday. In Asia on Monday, Japan's Nikkei slid 1.9 percent, Hong Kong's Hang Seng lost 0.8 percent and China's Shanghai Composite was little changed.
Meanwhile, the price of gold, which investors buy in times of uncertainty as a safe haven of value, rose 1.6 percent to $1,577 per ounce amid the heightened tensions in the Middle East.
U.S. Treasurys gained, pushing the yield on the 10-year note down 1.4 basis points to 1.77 percent.
In Europe, London's FTSE slipped 0.8 percent, Germany's DAX dropped 1.3 percent and France's CAC was down 1 percent.
Asian markets were mostly under pressure as Japan's Nikkei lost 1.9 percent, Hong Kong's Hang Seng fell 0.8 percent and China's Shanghai Composite was unchanged.
On Sunday, stock markets in the Middle East keep suffering record losses amid Iranian promises for a harsh revenge against the United States.
Kuwaiti and Saudi Arabian stocks led losses while markets in the United Arab Emirates, where major international companies list their shares, followed the suit.
The index in Kuwaiti stock was down nearly 4.1% with shares of Kuwait Finance House and National Bank of Kuwait down %5.1 and %2.8 respectively.
Saudi stocks .TASI plunged %2.2 while state-run oil company Aramco, the largest in the world, suffered a loss of %1.7 to see its shares traded at 34.55 riyals, a record low since the company launched its initial public offering (IPO) in early December.
Indices at Dubai’s .DFMGI and Abu Dhabi’s .ADI also dropped %3.1 and %1.41, respectively.
A similar falling trend has been seen in almost all major stock markets across the world since early Friday when the United States launched a strike on the convoy of Lieutenant General Qassem Soleimani, the commander of Iran’s elite Quds force, while he was leaving the airport in the Iraqi capital Baghdad.
Soleimani, a high-profile figure in years of anti-terror fight in the Middle East, was assassinated along nine other Iranian and Iraqi military and militia fighters and commanders.
Oil prices rose over 1%, pushing Brent above $70 a barrel.
Brent crude futures LCOc1 soared to a high of $70.74 a barrel and was at $69.38 at 1150 GMT, up 78 cents, or more than 1%, from Friday’s settlement.
U.S. West Texas Intermediate CLc1 crude was at $63.64 a barrel, up 59 cents, or 0.9%, after touching $64.72, the highest since April.
The region accounts for nearly half of the world’s oil production, while a fifth of the world’s oil shipments pass through the Strait of Hormuz.
On Sunday U.S. President Donald Trump threatened to impose sanctions on Iraq, the second largest producer among the Organization of the Petroleum Exporting Countries (OPEC), if U.S. troops were forced to withdraw from the country.
Baghdad earlier called on U.S. and other foreign troops to leave Iraq.
"The situation brings lots of uncertainty and geopolitical tea-leaf reading on reactions. While the closure of the Strait of Hormuz remains a very unlikely event, the deterioration in Iraq bears supply risks,” said Norbert Rucker, head of economics at Swiss bank Julius Baer.
"Geopolitics tend to be a temporary force on oil markets and we believe this time is no different. We raise our near-term forecast to $65 per barrel, and maintain a neutral view”.
The Economist Intelligence Unit raised its first quarter projection for Brent by $5 to $70 a barrel, assessing that Iran would likely seek to avoid an open conflict.